A deep dive into all things cryptocurrency
This July, Utah Business hosted the Funding Summit, an exclusive three-part panel discussion with funding and venture capital leaders. In this final panel discussion, we chatted with Neal Harmon, CEO and co-founder of Angel Studios; Scott Paul, who’s in Angel Investors and runs a YouTube channel called Life with Scott; and we have Jared Hutchings, co-founder of crypt-based Peer Ventures. Watch the discussion above or read the transcript below, and don’t forget to watch Part One and Part Two of the discussion.
Elle Griffin: I want to start with Angel Studios because this is a very unique model that could disrupt Hollywood and how we make movies. So what you guys are doing?
Neal Harmon: Angel Studios is a studio built on the premise that thousands of people make better decisions as to what will be a successful media venture than a few executives in Hollywood. This is based on Wisdom of Crowds, a book that established that if you set things up right for a crowd, and it’s a very diverse group of people, and they make their decision independently of anyone else so that there’s no crowd think, then you actually get a smarter decision.
We’ve done a couple of flagship shows [on YouTube]. One’s called “Dry Bar Comedy”, which gets over a billion views a year. And, the other one’s called “The Chosen,” which is a story of those whose lives Christ touched from their perspective. That show was backed by 19,000 people who invested over $10 million.
Scott Paul: And the cool thing is they got equity in the show, it wasn’t just a donation.
Elle Griffin: How does that work? Because that’s different than a Kickstarter model or Go Fund Me.
Neal Harmon: The first level of crowdfunding, there’s no equity. And then the second level regulation CF, you buy shares. Or, it can be used as a debt instrument or other types of funding. But, for the most part, people are selling shares of their company because they want everybody who’s involved in the movement to be part of it. At Angel Studios, we say be part of stories that matter. Then when a show is successful, rather than the big execs in Hollywood getting the big paychecks, then the owners end up getting to see the profits.
Elle Griffin: That’s so interesting. And kind of segues into what Scott is doing on YouTube.
Scott Paul:I was doing Angel Investing for six years and I loved the journey of meeting companies and founders and hearing their stories. But I quickly ran out of my own money to spend. So I’m like, “Why don’t I publicize these stories in these people? Why don’t I share their story? And help them crowdfund and introduce them to investors or whatever?” I haven’t yet got the model down as Neal has, but there are great companies like Republic and others that are helping equity crowdfunding for software products.
Neal Harmon: There are three leaders that I’m aware of. You might know of others, but Republic that you mentioned, We Funder, and Start Engine are the kind of leaders in the crowdfunding space. Our system is totally focused on media projects. We won’t even do any crowdfunding except around media.
Scott Paul: I hope to do what Neal’s done for “Dry Bar Comedy” and “The Chosen.” I want to take that to back the next DoorDash and Airbnb of the world. My channel gives exposure to the next possible Mark Zuckerberg. Like, I want to find projects at that level, and show the journey of them from the dorm or from the basement or from the idea stage to funding and growing an empire.
Elle Griffin: Are you hoping that you’re going to share that process on YouTube and then the people that are following you on YouTube will then invest?
Scott Paul: I don’t know who the investor will be, but all I know is that when you make content and share awesome things that the world manifests in weird ways and you’ll make connections. My whole life is just about connecting people.
I was at Disney running influencers for a long time. And, I think every one of them is a founder now. Like, if you’re out there with an audience, you are a founder. You can monetize that, and you don’t have to be dependent on your YouTube views or you can go create products and create a business. And that’s amazing. That founder definition has really been blurred and in a good way.
Elle Griffin: If anybody can be a founder, then what do they need to do first? Build an audience?
Jared Hutchings: Crypto just dovetails so neatly into this conversation. Because what crypto has done is in the very early stages that allowed anyone to participate in the full value chain. I mean, what was interesting about the first .com boom, was that if you had a venture fund with the right address or you were connected, you could raise money. You could start to build yourself as a founder, or you could participate with projects. And now at the very early stages, you can participate and have a piece of it. In the media world, in crypto, a recent example is obviously with NFTs.
NFTs are fascinating. Lil Dicky just released an NFT that included participation in the publishing rights of a song. So, now you’re able to really sort of participate if you have something to contribute, it doesn’t have to be the all-star founder per se. Everybody can contribute something. I think one interesting thing in this category is the new versions of crypto social networks that are coming out.
Elle Griffin: Tell me more, please.
Jared Hutchings: We are not investors in this one, but one of the interesting ones that came out this year was Bitcloud. And, Bitcloud is interesting because it looks a lot like a traditional social network and it has a profile and you can follow people and you can post messages.
But, like that’s emblematic of the new of the new playground, but what’s very different are the features that are more kind of to the core of it.
More interesting, more robust and have kind of new capabilities that the old ones don’t. And, in the case of some of these new crypto social networks, first of all, there are no ads, there’s no ad-driven, but people do pay a small amount to participate. But when you create a profile on this new social network, you also simultaneously create a creator coin. That is your coin as the profile holder. And at first, this really rubbed me the wrong way at first, because attaching value to people didn’t seem like a very good idea.
But what’s beautiful about it is that to this conversation around like founders and being a founder and creating value, and how do you get started you’re asking, is that you create a profile, you create a coin and as people discover you, I mean, you’re just, you’re not Lil Dicky, you’re just starting out, people discover you and they see something or they get excited or you start to collect a fan base. Then they can say, you know what? I’m going to buy her token.
Scott Paul: On Bitcloud, you can start making content there and generating an audience on the platform. Elon is still like the number one coin. I lost probably a good chunk of money because I bought his coin thinking it was going to go up, and it did not because he dissed Bitcoin. So it went down. It’s literally like a stock market of people.
Elle Griffin: There are some really exciting things happening, but is it tricky to crowdfund with dollars?
Neal Harmon: Well no, but people who are trying to launch crypto-type products where people invest in them, still have to abide by the crowdfunding laws. And so that just creates red tape for somebody who’s in the US. The nice thing about the crowdfunding laws is that under the US legal system, if you have a dispute, or if there’s something wrong with the way that the management or the board of a company are handling things, then there’s recourse.
Scott Paul: One thing I’ve had to learn over the last few years is there are cryptocurrencies, and there’s blockchain and they’re not the same thing. There are projects that are happening and people are trying to do things that aren’t around a currency right now. And it’s encryption, it’s for example, there are these new things called DAOs, decentralized autonomous organizations.
But we hear cryptocurrency and we think of all the news and the value is going up and down and, we’re forgetting that there’s this incredible technology underlying all of this, that is this blockchain technology and smart contract technology that allows us to build companies on top of this. There’s an application layer behind all this.
Elle Griffin: What if you’re an individual founder or founder of a company, how would this fit into your strategy of if you’re trying to raise money for a project or company?
Scott Paul: Try to be open to accepting more than just one currency as payment if you can figure that out.
Neal Harmon: We focus some of our cash every month on just purchasing crypto, just to diversify and learn the technologies as well because there are specific technologies that are useful. You mentioned NFTs before. NFT’s are the first time that we’ve been able to recreate in the digital world essentially the original, right? Everybody wants to have the original painting, or the original carving, or the original, but we’ve never had that for digital content. There’s no physical original and NFTs are a way to say, this is the original and you can have provenance. So you could say this was owned by LeBron James, and then it was owned by Scott Paul, and then I get to buy it because Scott had it.
Elle Griffin: Do you have to buy an NFT tokenized product? I don’t even know how you would say that. Do you have to buy it with cryptocurrency? Or can you buy it in US dollars?
Scott Paul: Yes, you’ll be able to buy with money and FTE’s. Venmo now has crypto in it. And so the vehicle which you purchased in NFT, or a policy on the block, it’s going to be whatever money you want. We are just piping it together. You can take USD with very little fees and put it into crypto.
Elle Griffin: This is interesting because if you’re Leonardo da Vinci and you sell the Mona Lisa, then now da Vinci’s heirs making tons of money every time it sells to The Louvre.
Neal Harmon: Assuming that the NFT system that you’ve chosen has that built into it.
Top Shot, NBA Top Shot, it does have that built into it. So the NBA earns a percentage off of every transaction, even though the ownership moves to a new.
Jared Hutchings: That’s right. And you could have said, not giving away the publishing rights, but you could still say, oh, but I want 5 percent of every transaction of this paint, that ever happens.
Elle Griffin: Where’s the future going in video and movies?
Neal Harmon: It’s a similar lifecycle. Right now the old model is that the studio owns the copyright. And then the studio takes a distribution fee off the top, maybe 30 percent. And then they take out all the costs. And if there’s any backhand, after all the costs, all the print and advertising, marketing, and everything, then they’ll pay that out to the original investors in a film. But everybody knows that translates into zero. Zero goes back to the investors because the studio doesn’t have in its interest to actually reduce those costs because they take their amount off the top. And that’s one of the things that we changed in the system that we offered in Angel Studios is that we don’t have a distribution fee. Long-term, we feel like we’re going to be a more successful studio because we’re aligning the creators with the audience because the audience is backing them.
Elle Griffin: Do you have parting comments? Thoughts on the industry?
Scott Paul: Once wages can be paid in crypto―like the NFL is doing, there are people who had taken their NFL salaries in Bitcoin. Then there’s going to have to be services that provide that to be more easily done than it is right now, because it’s not done.
Jared Hutchings: Well the demands coming the other way, so it depends. Some companies are asking to only be funded in crypto, and then some companies are traditional equity. There are several things that we’re doing in terms of just our fund, for instance, that are very traditional. You have to fund with a USD wire and other things because of the regulatory stage that we’re in, but as the industry becomes regulated and we move forward, then we’ll start to see kind of more seamless flow of value and not just between investors and entrepreneurs, but investors, entrepreneurs, and then the early customers, which is very tricky to give customers participation in the value of something early. But I think we’re going to see all those things blossom in the coming years. I’m excited.